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In recent years, businesses and investors have become increasingly aware of climate change and are now taking positive action to stop it. A great example is Microsoft's initiative to become carbon neutral and eventually carbon negative. For these initiatives to succeed, multiple parties including institutional investors, major corporations, supply chain partners, environmentalist groups, government regulators, and the general public must now work together, sometimes for the first time. This new collaboration in turn requires exchanging data and building trust across traditional boundaries.
Today, this is simply not possible. Some data, such as utility bills or shipping records, are held in those institutions' data siloes and are tedious to get. Most data, though, is just not available. Most products involve multiple materials and activities to manufacture and distribute, and the data for the carbon footprint of their raw materials and activities are not available. As a result, we're forced to rely on broad aggregates of economic output and do not have reliable carbon emissions data for any particular product.
The solution is for members of a supply chain make the carbon emissions of their products and services available, so that it becomes easy to calculate the carbon emissions of products and services made from them. Blockchain or distributed ledger technologies (DLT's) should be the backbone of any multi-party collaboration on climate change, because they are specifically designed for such scenarios. Blockchains bring data out of the individual organizations' silos and enable multiple parties to collaborate based on data and code. They rely on independent verification to validate claims, instead of trust in a central authority. They allow values, in this case of carbon emissions, to be tokenized and transferred through a supply chain of multiple, disparate parties across traditional national and industry boundaries. With the blockchain, we could replace guesswork and approximations with hard data based on real transactions.
The mission of this working group is to identify how DLT's could improve corporate or personal carbon accounting and make carbon neutral certifications more open, transparent, and credible. We're here to help
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Fortunately, DLT's are by design suited for solving precisely these issues. They are an "internet of value" where data could be transacted across different organizations through a shared ledger. Furthermore, they are "trustless" networks and do not require trust in a single organization, whether it's the company making a climate action claim or an entity certifying it. Instead, the architecture of DLT's allows multiple parties to come together and verify all claims independently with data and code.
In this case, a permissioned blockchain such as Hyperledger Fabric allows a company to share its data for independent verification by trusted parties. Thus, it could provide transparency and protect privacy at the same time. For example,
- A private channel could be set up for a company, its trusted data sources, and certifying entities.
- The data sources could include tokens of carbon emissions from utilities, suppliers, shippers, and other sources that could supply data automatically about a company's activities. When the data is pulled from their data sources, they would be digitally signed to certify their sources. A hash of the data could also be stored for later verifying that the data has not been altered. By turning emissions data into tokens, they become standardized accounts of emissions that could be transferred across different organizations.
- One or more certifying entities could have access to the data and use smart contracts to calculate the company's emissions based on the data on the private channel.
- The result could then be signed and published to a more public blockchain, for example as a token.
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Today, there are a lot of different environmental certifications, and the general public often doesn't know which one they could trust. Thus, some consumers feel that any business which makes a pro-environment claim is "greenwashing," while many businesses feel that no matter what they do, it's not good enough.This is a problem of transparency, not of data but of methodologies. Today's certifications are either opaque, proprietary, or at least highly complex. Very few people have had a chance to study and compare the certifications.
But what if we turned opened up the certifications into software code and made them open source, so process by creating open source software for verifying climate action based on data? Then anybody could study a certification and understand how it works?. We could run several certifications on the same company, or even conduct studies comparing the certifications on a range of companies.
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